Iridium LLC (Original)

Iridium's 1999 bankruptcy wrote off $5 billion in investment in satellite phones that cost too much for too few users. The Motorola-led consortium launched 66 satellites to provide global voice communication, but by the time the system became operational, cellular networks had expanded to cover most populated areas. Iridium's phones cost $3,000 and calls cost $7 per minute; cellular offered better service in most places people actually lived. The mechanism failure was technology timing mismatch. Iridium was conceived in the late 1980s when cellular coverage was sparse; by 1998 launch, cellular had expanded dramatically. The system was designed for a world that no longer existed—passengers on ships and planes, workers in remote mines, people genuinely beyond cellular reach. This market existed but was too small to support the infrastructure investment. Iridium also demonstrated the challenges of space-based business models. The satellites required continuous replacement; ground infrastructure required maintenance; customer acquisition cost exceeded lifetime value. The original Iridium went bankrupt after just 9 months of commercial operation, one of the fastest failures from IPO to bankruptcy in history. The assets were purchased for $25 million (0.5% of investment) and Iridium relaunched as a government-focused service. The technology worked; the business model didn't.